A report from Fortune. “The regional housing markets seeing the most price cuts are in the very places that soared the most during the pandemic. As that pandemic housing boom fizzled out last month, things shifted quickly in Provo. In May, a staggering 47.8% of Provo sellers slashed their list price. That’s up from 12.2% in May 2021. Just behind Provo was Tacoma, Wash. (where 47.7% of listings got a price cut); Denver (46.9%); Salt Lake City (45.8%); Sacramento (44.3%); Boise, Idaho (44.2%); Ogden, Utah (42.6%); Portland, Ore. (42.0%); Indianapolis (41.9%); and Philadelphia (41.2%).”
The Portland Press Herald in Maine. “Tom Landry, owner of Benchmark Real Estate in Portland, felt a shift two or three weeks ago, like a little bit of the air went out of the market. Erin LaMarche, a Coldwell Banker realtor based in Kennebunkport, said she’s seen more price reduction in the past two weeks than she had in the previous two years. ‘It’s no longer a feeding frenzy with insane numbers of offers on listings,’ said Hitz, a broker with Maine Home Connection in Portland.”
“Leanne Barschdorf Nichols, a broker with Keller Williams Realty in Portland, said everything would have to completely fall apart before the market swings in buyers’ favor. There have been some price reductions, yes, but she said those are largely corrections from people who have gotten ‘ahead of their skis’ and listed a property at an unreasonably high price.”
Mansion Global. “‘Some buyers are no longer able to afford the home they want because mortgage rates have increased so much. There aren’t nearly as many people moving into the Boise area now that prices have gone through the roof,’ Shauna Pendleton, a Redfin agent in Boise, said in the report. ‘Ironically, a lot of Boise newcomers are now leaving because the quiet, slow-paced lifestyle that drew them here doesn’t exist the way it did before so many people moved in.’”
From 10/11 Now on Nebraska. “Across the Midwest the housing market is starting to slow down. Homes are staying on the market longer than they were during the pandemic. Lincoln real estate agent Megan Ourada said the ‘cool down’ starts at the top. ‘In those million-plus price points it’s really starting to even out,’ Ourada said. ‘We see that trickle down. So, over the next, I would guess maybe year, we’ll see that switching and becoming more of an even market.’ 10/11 NOW spoke with several other realtors on Tuesday who confirmed these things. Houses are staying on the market for a little longer, interest rates are up and on the rare occasion, sellers will discount their homes.”
“Ourada said the average closing price on all property in Lincoln is $260,000. ‘A house that was $100,000 purchase price this year, might have been five years ago a $60,000 house. I would expect over the next year or so it would be 105, 110, that normalized increase in equity.’ Ourada said this change in market is no reason for buyers or sellers to panic.”
The Dallas Business Journal. “The North Texas housing market is shifting fast as rising interest rates and volatility in the stock market make their mark, said Michael Coburn, broker/owner of Re/Max Town & Country. Now, however, sellers are looking at market trends, using accurate comps and listing their homes at reasonable prices, Coburn said. He’s seeing more price reductions and properties staying on the market longer. ‘This by no means is a bubble about to pop,’ he said. ‘It’s just a long-overdue correction in the market.’”
“Last year and early this year, real estate agents would put a house on the market on a Thursday and have multiple offers, sometimes 25 to 100, at far above the list price by Sunday, Coburn said. ‘Sellers would see a home sell in a neighborhood for $400,000 that was listed at $300,000, so they would price their home at or above $400,000 and sell for $450,000 to $500,000, and the next seller would price at $500,000,’ he said. ‘In the last two years, a seller could get away with doing that. Buyers and sellers did not care about comps — it was a free for all.’”
The Bakersfield Californian. “Bakersfield’s primary measure of local home prices took a dip last month that observers expect was the first of more to come amid expectations for continuing mortgage rates increases. After holding steady or gaining in recent months, the median price of an existing home in the city dropped 1.5 percent to settle at $385,000, which was still up more than 20 percent from the same month a year earlier, according to data from local appraiser Gary Crabtree.”
“Crabtree’s market report noted the supply of homes for sale in Bakersfield rose more than 37 percent in May to reach 609 listings, which represented a year-over-year increase of 118 percent. He observed that rising costs are ‘beginning to impact the market as offers above list price and multiple offers decline.’ ‘With 60 years’ market experience, I can’t recall a more abrupt short-term change’ in the market, he wrote.”
From The Hill. “Hiring freezes and layoffs are hitting the tech sector as Silicon Valley prepares for a predicted recession. Near-zero interest rates, a booming stock market and massive consumer demand allowed tech firms to aggressively expand their workforce at the start of the pandemic. But the recent economic downturn is forcing many companies to reverse course and cut costs to shore up their reserves. ‘Even six months or a year ago the view was, in many of the smaller firms of course, ‘Profits aren’t important, we just gotta grow. We grow into profits.’ During recessions, and during valuation shifts like we’ve seen in the markets in the last couple of months, unprofitable growth companies are getting killed. Their stock prices are collapsing,’ said Steven Weber, a professor at the Graduate School of Information at UC Berkeley.”
“Google Cloud terminated dozens of support roles in March, Insider first reported. An employee on the team who was not cut during the reorganizing told The Hill that since the initial ‘vague’ announcement, they still lack a clear picture of what triggered the decision and leadership’s vision for the future of the remaining team. ‘It’s pretty stressful. I mean, obviously, this job is how I pay my mortgage and where I get insurance. It’s a job that I like doing. I like working with my customers. I liked working with the folks who got laid off, they were good people,’ the employee added.”
From Bloomberg. “Lennar Corp. has started trimming prices and offering buyer incentives in some areas of the US to bolster sales in a cooling housing market. With demand now starting to wane after the pandemic boom, ‘current attempts at guidance are tantamount to ‘guessing’ and not ‘guiding,’ Executive Chairman Stuart Miller said in the company’s earnings statement. He warned about the slowdown already underway, calling it a ‘complicated moment in the market.’”
“Seven regions had significant slowdowns this month, Lennar said. They were: Raleigh, North Carolina; Minnesota; Austin, Texas; Los Angeles, the Central Valley and Sacramento in California; and Seattle. The company increased incentives, such as mortgage rate ‘buy-downs,’ and lowered prices in some subdivisions to boost demand.”
The Commercial Observer. “‘CMBS conduit and secured-based lending (SBL) transactions racked up approximately $263 million in realized losses during May 2022 through the workout of distressed assets, marking a sharp rise from the previous month,’ wrote Marc McDevitt, a senior managing director at CRED iQ. ‘CRED iQ identified 34 workouts classified as dispositions, liquidation or discounted payoffs in May 2022. Additionally, there were two distressed loans securitized in Freddie K transactions that were in need of a workout, but only one of those loans incurred a nominal loss. Of those 36 total workouts, there were 14 distressed assets that were resolved without a loss.’”
“‘Loss severities for the month of April ranged from 2 percent to 100 percent, based on outstanding balances at disposition. Total realized losses in May represented more than a threefold increase compared to April’s realized loss totals of approximately $75 million.’”
The Financial Post. “Evidence that Canada’s housing market is cooling has been obvious for several months, but now some economists say signs are appearing that the reckoning will be worse than they had feared. This month too Magenta Capital Corporation, one of Canada’s largest private lenders, decided to temporarily halt new loan applications until September. Although Magenta accounts for only a small portion of total lending, it is a big player in the subprime market, says Capital, and its decision may only be the beginning.”
“‘There will be so many more of these Mortgage Investment Corps suspending lending in the next eight weeks,’ said Ron Butler, of Butler Mortgage, in a tweet after the news. ‘When your modelling suddenly shows values dropping 5% a month in some markets, what else can you do?’”
The Vancouver Sun. “It’s hard to keep up with all the things that have flipped since Canada’s COVID-crazed housing run up. As mortgage broker Ron Butler has quipped, a ‘fear of missing out’ — or FOMO — has given way to ‘a fear of getting screwed.’ And while there are housing difficulties in many countries now, don’t be lulled into thinking Canada is like elsewhere. Price jumps here have been more extreme. So now everyone is vulnerable to a bubble.”
“Prices have already dropped 15 to 25 per cent in some suburbs of Vancouver and Toronto. Big-city cores could well be next, despite urban Canadians getting used to decades of strong demand from domestic and foreign buyers and speculators. With the Bank of Canada raising lending rates in the past couple of months, the typical five-year fixed-rate mortgage has jumped from about 1.75 per cent to five per cent and more. Many of those who overstretched to go all-in could soon be feeling burned.”
“Distressed sellers are already putting places on the market in Greater Toronto. And, as specialist John Pasalis notes, even the Bank of Canada doesn’t expect the full impact of interest rate hikes to be felt for 18 to 24 months. ‘2023 could get challenging for highly leveraged households if rates stay high and if we indeed see a recession and job losses,’ Pasalis says. ‘That’s when Canada could really feel the downside of basing much of its economic growth on driving up household debt.’”
“Many bought in a frenzy by borrowing against their own homes, when mortgages were rock bottom. Even with residents of Vancouver and Toronto struggling with some of the most unaffordable property in the world (the typical price in Greater Vancouver is $1.26 million), pandemic investors were among those making several offers on homes, squeezing out first-time buyers again. Governments did nothing to stop the speculation. And we’ll never know if their inaction has to do with a large number of federal Liberal Cabinet Ministers and Ottawa MPs (as well as MLAs in Victoria) being among those investors.”